Coping with Red Tape


No business operates in a vacuum or under a glass dome. New businesses are subject to the pressures and requirements of society’s legal and regulatory system. If you need a trademark, a company brand, or a patent, or if you’re thinking of becoming incorporated, you will definitely need legal help. Many other situations require the help of a lawyer too.

Likewise, you’ll be coping with government regulations, many of which were written with larger businesses in mind are applied to SMEs anyway. Disposing off hazardous wastes, for example, may be difficult for small companies, which typically lack their own water-treatment facilities. Similarly, small businesses may have problems complying with disabilities laws, designed to ensure that disabled consumers receive the same level of services as other customers. Thus SMEs may be required to make costly modifications to their facilities or prove that doing so would pose an economic hardship.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

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Economies of Scale


You get economies of scale when the unit cost falls as the number of units made increases. There are three reasons for the lower unit costs:

  • Fixed costs are spread over a larger number of units;
  • You can use more efficient processes, perhaps including more automation;
  • More experience with the product raises efficiency.

Economies of scale encourage you to concentrate operations and make as many units as possible in the same facilities. Another benefit from larger operations comes from the ‘learning curve.’ The more often you repeat something, the easier it becomes.

Obviously, you can’t expand facilities for ever, and there is no point in having more capacity than likely demand. More realistically, if you expand beyond a certain size the organization gets too complex – making communications, support functions and management more difficult. Beyond this point you get dis-economies of scale. You can see these in many large organizations, such as governments, which aim for the efficiencies that come from centralization, but actually get bogged down in bureaucracy and red tape.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.